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Beware of the Granny Scam

By Jennie L. Phipps · Bankrate.com
Wednesday, December 22, 2010
Posted: 11 am ET

This isn't exactly a retirement planning topic, but it does deal with money and grandchildren, one of the things that makes retirement a joy.

'Tis the season for the Granny Scam. It's a chestnut that has had a resurgence this year. The fraud works like this.

The phone rings and the person on the other end purports to be your favorite grandchild, and says he has been arrested for something like driving while drinking beer, smoking, fishing with no license or possession of a single marijuana cigarette, and is in jail. He needs money for bail and doesn't want to call his parents because they will be angry. Sometimes, someone purporting to be Sgt. Smith gets on the phone and confirms the dilemma.

Granny complies, following the instructions to send the $2,000 or so via Western Union. If that works, the "grandson" may come back for more, asking for money to pay the hospital emergency room where he has gone to have treatment for the injuries he incurred while in jail.

By that time, surely even the most gullible granny has figured out she's been had.

Reports of this kind of fraud have been made in 14 states and several Canadian provinces.

If you get a call similar to one of these, Western Union urges grandparents to check it out -- even if the grandchild begs for confidentiality and says you're the one adult he loves and trusts. That appeal is part of the scam. Chances are, a call to mom and dad or somebody else in the know will save you thousands of dollars and prove that the kid is all right -- and not sitting in the slammer after all.

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21 Comments
jnup
January 13, 2011 at 6:33 am

for once it might be a good thing that grammy believes if you're in jail there's a reason. so you can stay in jail.

KC
January 10, 2011 at 2:00 pm

Very very common scam within the past year...I've taken numerous reports of this occurring in Illinois...There is really no ability for PDs to catch the offenders because they reside in other countries (Canada is the popular area now)...So just be smart and always verify..These scammers are smart so don't fall for it..Please advise your loved ones of this

JoAnne
January 08, 2011 at 6:59 am

I thought 401A was no longer available. It use to be a plan where the contributions were deducted on an after tax basis. Maybe this is a Defined Benefit Plan, you don't contribute to it, your employer puts in a percentage of your salary, not you.

You can request your employer to add a fund where you would want your contributions to be invested.

hotandcold
January 06, 2011 at 10:53 pm

It happened to my motherinlaw last year. The guy called claiming it was her grandson. He NEVER said his name. Grandma said "Is that you, Chucky?" Yeah! Chucky. Now he had a name. She said, "It doesn't sound like my Chucky". He says, "cause I've been crying." He told her to wire $6,000 to someplace in Spain. Gave her a number for the state department to talk to an official(Located in Canada!!) She falls for it and wires the money. Then she calls us - even though "Chucky" told her not to call mom & dad. We get her to cancel the wire w/Western Union. Has to claim it was fraud to do that. Western Union keeps $1,000(!) dollars for the inconvenience. (Now that's a good scam!) She got the rest of her money back.
Old folks don't question things as often as we'd like them too. A call like this unsettles them,they easily get flustered and want to help their loved ones. They don't think about verifying the facts first. Sad but true in my motherinlaw's case.
These folks were pretty slick. They had their scam well set up. I hope someone can learn from this incident and maybe tell their aging parents what to do if they ever get a phone call like this.

Christine
January 02, 2011 at 1:38 pm

Most often, contributions to 401a plans are made by the employer on behalf of the employee. It is 4% of your income but does NOT come out of your income. It is free money. Our admin people explain that to new employees and regularly have one who wants out of the free money because they don't understand it does not change their paycheck. So if I were you, I would double-check before trying to get out of it.
403b is different, it does come out of your income. In my case, I chose to participate because I would like to retire sometime before I die.

Austhinker
January 02, 2011 at 7:12 am

Re the Granny Scam:

Just call the grandchild on their mobile phone! (don't get the number from the caller, though!).

If you don't already have your favorite grandchild's mobile phone number, it shouldn't be hard to find a pretext to get it (from their parents etc.) without betraying the "grandchild's" confidence.

Alternatively, find out where they are supposedly being held, get the contact details from a reputable source, and call the jail to verify. If you're real clever, do this whilst letting them think you're going to send the money, and if you find out it's a scam call the police and see if they can set up a "sting" to catch the scammer.

Austhinker
January 02, 2011 at 7:00 am

Richard, a quick Google of "401 a plan" came up with this

Can I make contributions to the plan?
You may not. Your employer completely funds the 401(a) plan.

It seems to me that you may be misunderstanding what your employer is doing. If your employer is taking 401(a) plan contributions from your pay/salary then I'd suggest you get legal or financial advice, as this doesn't seem to be how the plan is supposed to work. A bit of Googling of your own wouldn't hurt either.

403(b) plans are a bit different, however I doubt that you would be forced to make contributions yourself. Also, quick Googling indicates that you may be able to ask your employer to add your preferred retirement plan to their list of available plans.

Charles
December 31, 2010 at 5:34 pm

Richard, sorry but the only way you can get out of your employers plan is to quit.
On the other hand, unless you are at least 50, your employers plan is probably better than the retirement plan the government forces you to pay into - Social Security.

Jeff
December 29, 2010 at 10:46 am

Richard, you can work somewhere else. Not trying to be a Smart A, but your employer under IRS guidelines can force you to participate in a retirement plan. I know this because I work for a retirement plan providing company. If it's required, you can do nothing but have it happen, or work somewhere else.

Richard
December 22, 2010 at 1:43 pm

My employer is requiring me to contribute 4% of my income into a 401a or 403b plan. Is there anything I can do because I do not want to invest in any of their retirement plans? It doesn't seem right to force me to do something with money I've earned.